Testing time in Japan for Hatoyama’s diplomatic skills

20 January 2010

Author: Yoichi Funabashi

This year will be the crucial test of whether the administration led by the Democratic Party of Japan can develop into a vigorous, staying force. Its greatest challenges lie in the areas of diplomacy and national security.

On January 4th, in his first news conference of the year, Prime Minister Yukio Hatoyama said, ‘About half of domestic politics is, in a sense, taken up by foreign affairs and national security.’ Hatoyama’s comment was undoubtedly rooted in his recognition of the discord that has developed with the United States over the thorny issue of where to relocate the U.S. Marines Corps Air Station Futenma in Ginowan, Okinawa Prefecture.

If the Hatoyama administration stumbles badly in its relations with Washington, the Japanese public will very possibly reject the DPJ as capable of handling diplomacy.

These developments come at a time when the world is undergoing major transformation. The end of the Cold War that made enemies of the United States and the Soviet Union was followed by an era in which the United States stood tall as the world’s sole superpower; but that, too, has ended.

Global events that followed the shock arising from the collapse of U.S. investment bank Lehman Brothers in September 2008 have been revolving around the newly created G20 as well as the increasing importance of a ‘G2’ in the form of the United States and China.

These trends point to a power shift toward newly emerging economic giants, such as China and India, along with a power fusion in which Washington and Beijing appear to be transforming their relationship into one of symbiosis.

For more than three decades, Japan has pushed its global diplomacy mainly through the club of advanced Western economies that constituted the G7 and G8 groupings.

But those two groupings appear to be increasingly irrelevant with the emergence of the G20 and the G2.

At the same time, it is still not clear how far either the G20 or the G2 will become the defining framework for global order in this century. There is still the possibility that these two groupings could end up being only tools of crisis management.

What is certain is that the Asia-Pacific region will rise in importance and low-carbon societies will become the norm. In that sense, the DPJ-led government is not mistaken in placing policy priority on the creation of an East Asian community and in attempting to reduce Japan’s greenhouse gas emissions by 25 per cent by 2020.

The problem facing the new government is how to implement measures to achieve those two goals and devise diplomatic platforms for those purposes. The DPJ did not delve deeply into a viable policy framework before it took control of government last September. It now has to undergo on-the-job training, as it were, to come up with such a framework.

At long last, the global economy appears to be heading toward a recovery course. This recovery is being led by China and other newly emerging economic powers. According to the International Monetary Fund, about 80 per cent of growth in the global economy after the Lehman shock is due to newly emerging economic powers and developing nations.

In particular, growth in the Asia-Pacific region is brisk. There is also a rapid shift in wealth from the West to the Asia-Pacific region. That has led, in turn, to a greater voice for those newly emerging nations.

The 15th Conference of the Parties (COP15) to the U.N. Framework Convention on Climate Change held in December in Copenhagen saw the emergence of a new force dubbed BASIC, standing for Brazil, South Africa, India and China. They jointly opposed a call by advanced nations for a binding agreement on emissions reductions and contributed to that proposal’s defeat.

Not too long ago, the term BRICs was used to designate the high-growth nations of Brazil, Russia, India and China. The term was often used by market experts. BASIC is a bloc that has made its voice known in a forum of global governance and as such is a political term. This may simply be a natural progression in which for the first time in history a majority of the world’s population is capable of speaking up about the world order.

The key from now on will be what happens in the Asia-Pacific region. Of the G20 nations, nine belong to the Asia-Pacific Economic Cooperation (APEC) forum. As U.S. President Barack Obama said in a November speech in Tokyo, there is growing recognition of ‘the limits of depending primarily on American consumers and Asian exports to drive growth.’ There is now a need to create demand within the Asian region and to deepen regional integration. It will also be important to share with the world the fruits of that growth and those opportunities.

To achieve that, Japan must push for free trade agreements with Asian nations as well as the United States. But no mention was made in the ‘new growth strategy’ recently announced by the Hatoyama administration about FTAs with the United States, South Korea and China. This, despite the fact the DPJ campaign manifesto called for an FTA with the United States and that an FTA with South Korea, and later with China, would form the core of an East Asian community.

The omission was likely due to concerns about calls for trade liberalisation of farm products, but the DPJ should have demonstrated what differences are possible with a change in government. On another matter, in order to connect APEC more functionally with the G20, an informal policy discussion group should be set up among APEC nations that belong to the G20.

Fortunately, Japan will host this year’s APEC meeting in November. It will provide the perfect opportunity for Japanese diplomacy to spring into action.

Turning to the G2, it is true that no such formal institution exists now. Both Washington and Beijing deny the existence of such a special relationship. In some respects, strategic dialogue between the two nations is necessary because there are more conflicts of interest existing between them than common themes. But in the financial sector, a G2 of sorts has been created through the fusion of the United States and China. China purchases U.S. government bonds earned through its trade surplus with the United States, which allows Washington to cover its current deficits. While Washington wants China to devalue the yuan, it has to be careful to avoid a collapse of the dollar.

Taking a page out of deterrence theory and the concept of mutual assured destruction (MAD) achieved through a balance in nuclear weapons, the relationship between the two nations has come to be described as mutual assured destructive economies (MADE). The areas in which Washington and Beijing have to cooperate have expanded from economic growth, trade and finance to nuclear weapons, terrorism, global warming and peace-building.

As Harvard University professor Alastair Iain Johnston, an expert on Chinese politics, said, China is now an ‘insider’ in the international system. For the United States, the G2 can be considered an attempt to streamline its global strategy by further making China an insider.

At the same time, there does exist strong anxiety toward China within the United States. If a fusion that triggers dissatisfaction among the American public should spread, there is the danger the United States could be pushed toward an isolationist position. Moreover, depending on the direction and nature of the G2, other nations, such as the European Union, Japan, Russia and India, could feel alarmed.

Japan can serve as a ‘built-in stabiliser’ for the Sino-American relationship by firming up its respective ties with Washington and Beijing. Thought should be given to a policy dialogue among Japan, the United States and China to encourage such a development. When considering such a move, it should not be forgotten that the nations of the Asia-Pacific region consider the Japan-U.S. alliance a public good of the region.

South Korea, Australia, Singapore and Vietnam have all privately expressed their concerns to the United States about the Hatoyama administration’s view of the United States and its foreign policy toward Washington. The Hatoyama administration should take such concerns seriously.

Some within the Obama administration view the Hatoyama government’s diplomacy as one that is moving away from the United States. There are suspicions that such a trend is in response to the decline of the United States, or an expression of Japan’s increasing dependence on the Chinese economy, or the first steps toward a more independent stance or simply the first signs of isolationism.

Last month, World Bank President Robert Zoellick visited Japan and India. He seemed puzzled and said, in effect, that while China and India were seeking ways to utilise the United States, Japan appeared to be only thinking about how it could move away from the United States.

In this era of the G20 and the G2, it is imperative for Japan to reconstruct its diplomatic platforms. The foundation for those platforms is regional integration of the Asia-Pacific, and the Japan-U.S. alliance.

Japan should simultaneously undertake such important moves as reconfirming the Japan-U.S. alliance as a force for stability and deterrence in the region and, at the same time, redefining that alliance now that we have moved beyond both the Cold War and the post-Cold War eras. This is the diplomatic balancing act that is required of Japan.

Any transition period contains a mixture of opportunity and danger. No drastic or one-sided approach will do. ‘On-the-job’ training will be allowed, but what Japan has to do is learn the art of survival by handling matters in a multi-faceted manner.